Over the years of discussing with business-minded peers who are eager to start, these three Ps always seem to halt the discussion, as if they were dead ends or show-stoppers:
Product, Place, and Puhunan.
Surely there are many other factors to consider, such as 4Ps of Marketing and Porter’s 5 Forces, but these 3 Ps are the kill-joys in any small group discussions I’ve been. Inability to answer one almost collapses the whole conceptualized business plan. They are like the tripods to a successful business start-up.
Product (or Service)
Most will surely advise to choose what product (or service) first before anything else. And why not, it just makes sense, usually. Focus on what product (or service) you want, one you understand or is passionate on, evolve on it, assess the market and the competition, fill the gaps, the unserved or underserved portions of the market, and target market niches. Ideally.
But there comes a time that a product will not be fit to a certain good location (place) you are eyeing. So do you let go of the place? Or change the product and start from scratch? Or very expensive products that do not meet your budget. So do you uber stretch your budget then?
You might own a vacant space and is wondering how to multiply its value and make money out of it. Personally, there are lots of great products out there, but very difficult to find a suitable location. Especially for start-ups. Right now I have 3 prospective food franchises for consideration, but zero ideal locations. Will it be an actual space inside a mall, in train stations, hole in the wall or online? Also, certain locations are only ideal for certain products (such as the socio-economic segment of the usual foot traffic in the area), or vice versa. Our first instinct will be to look for signages like “commercial space available” and other space for rent ads. Sure why not.
Be a step further and go to the websites of your prospective locations and look for the leasing department if any. Or inquire in person, ask the tenants or guards, etc. The leasing people might have available location, designate new spots for you or you might need to line up and wait for vacancies. Another strategy is to ask franchisers of your chosen product, as some of them might actually have available locations in mind, just waiting for the perfect investment partner.
Coming from the AFFI expo, and interviews with franchisers, here’s an idea of how much some locations for food carts cost*:
- Inside Newly built mall in Anonas, to open next month: 16k monthly (4sqm) = 4k per 1sqm
- LRT Roosevelt Station: 16k to 20k monthly (4sqm) = 4k to 5k per 1sqm
- Shopwise / Puregold floor space: 20k to 25k monthly (4sqm) = 5k to 6.25k per 1sqm
- Commercial Space Near Farmers / Cubao MRT: 65k monthly (130sqm) = 500 per 1sqm
- Montalban Town Center: 12k monthly (4sqm) = 3k per 1sqm
So you have spare cash but you don’t have a product in mind or ideal location? Or you have a great product and ideal place, but don’t know how to finance it? If you have lots and lots of this P, then choosing a product or place will not be so hard right? Usual advice given is to use your spare cash and savings to finance your start-up. But please not your emergency cash ok?
As much as possible, do not borrow for your start up funds. If this can’t be helped, try your family and friends first, those who are more understanding and won’t mind some late repayments or won’t charge you big rates. Be careful in financing start-ups using bank loans or loans-from-shark-loans. You might end up with a bad bank record and a short-lived business, or that all your income just goes to interest rates. But hey, no guts, no glory so assess your risk appetite and repayment capacity.
Don’t just jump to investments. As they say, “investigate before you invest“. Or, as a GoNegosyo book says,
“Luck is the offspring of preparedness and opportunity”.
Dealing with the 3 Ps above (ideally simultaneously or in short intervals) will transition you towards the preparedness part. Once you complete the 3 Ps, then that’s opportunity. Grab it and work on the other smaller items. Good luck!
*Rental rates are based on indicative figures quoted by the franchisers, and are in no way the official figures. Hopefully close enough though. Electricity, water, security, maintenance and other fees may or may not be included in the rates provided.